NEW YORK (Reuters) - ACA Capital Holdings said Maryland state regulators will now make many significant business decisions for its main bond insurance unit, as the bond insurer tries to stave off a cash crunch.

Under the consent order with Maryland's Insurance Commissioner, ACA Financial Guaranty Corp must seek permission before pledging or assigning assets, paying dividends, or engaging in certain material transactions, according to a regulatory filing on Wednesday.

ACA Financial Guaranty saw its credit rating cut deep into junk territory earlier this month by Standard & Poor's. That move could have triggered a cash shortage by forcing it to post collateral for many derivative transactions.

Last week, ACA said it would not have to post collateral until at least January 18. It said it will work to stabilise its capital position and its access to funds.

ACA had nearly $70 billion of exposure to collateralised debt obligations as of the end of September, about $26 billion of which were asset-backed or mortgage-related. This contributed to the company's $1 billion loss in the third quarter. ACA shares now trade on the Pink Sheets.

The New York Times reported last week that Merrill Lynch & Co, Bear Stearns and other large financial companies were in talks about bailing out ACA. Banks and brokers could suffer billions of dollars of losses from credit protection they bought from ACA, if the insurer collapses.

Bear CFO Sam Molinaro said on December 20 that his bank's exposure to ACA was benign and immaterial.